Decision-Making with Relevant Costs at Facebook

• Values:

• Relevant Costs of New Project: $8,000,000
• Expected Annual Cash Inflows: $2,500,000
• Project Life: 5 years
• Discount Rate: 12%
• Requirements:

0. Calculate the net present value (NPV) of the new project for Facebook.
1. Determine the internal rate of return (IRR) and payback period.
2. Discuss how relevant costs influence strategic decisions at Facebook.
3. Recommend whether Facebook should proceed with the project based on financial analysis.